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Tuesday, March 24, 2015

7 reasons why NPAs are mounting in education loan - Insensitivity of banks pushes the students into debt trap


Based on the complaints received from various students, ELTF finds that the banks do not classify NPA properly and unnecessarily blame the students. We have found out 7 important  reasons for inflated NPA by banks. 

1.  Inhuman attitude of the bank officials.  Not understanding the financial status or earning capacity of the student.  Though IBA stipulates 10 to 15 years of flexible and telescopic repayment (lower EMI at the beginning and gradual increase of EMI in the later years), most of the branch managers fix huge EMI for 5 years.  This burdens the students.  EMI is fixed more than the income of the student. 

2.  Reluctance of bank managers and regional managers to re schedule the EMI, even in genuine cases.

3.  Wrong classification of education loans.  If the education loans are properly classified, nearly 75% of the present NPA will become good assets.  Banks purposely show increased NPA to avoid education loans.  They prefer huge corporate loans, even if they become NPA,  for 'obvious' reasons.  

4.  Right from the day 1 of a student entering the bank premises seeking education loan, he is being harassed and asked to run pillar to post.  The students get frustrated and develop enmity with the bank.  Managers do not create awareness of the bank rules among the students.  In many cases, we found managers themselves do not have good knowledge. 

5.  Lack of good relationship between the branch officials and the borrowing students.  That is why we always suggest that a get together of all the borrowing students once in a year to be conducted by the branches or regions, so that the students develop loyalty.  Unfortunately, no bank is willing to accept our suggestion.

6.  Lack of proper interest subsidy management by the branches.  Though 100% subsidy is available for students, the branches do not claim the correct subsidy in time.  Even the subsidy element is taken into account as NPA.   Unpaid subsidy is the default of the Government. For example, a person who avails a loan of Rs.1,00,000/- at an interest rate of 12% pa, disbursable for 4 years @ Rs.25,000/- per annum is eligible for an interest subsidy of Rs.42,000/- from the Government, if he is eligible.  Unfortunately, in most of the cases, the student gets only around 20%.  If he gets a subsidy of Rs.10,000/-, the bank forces the student to pay the balance amount of interest Rs.32,000/- (amount not paid by the Government).  When the student commits 3 months default, the bank classifies the entire loan as NPA, which includes the sum of Rs.32,000/- not paid by the Government.  It is the NPA of the Government technically and not that of the student.   How the student can be blamed?

7.  Individual banks and Indian Banks Association do not take interest in creating awareness about education loan, interest subsidy, repayment etc.  Even recently, when Ministry of HRD extended the interest subsidy due date for SC/ST students, neither the banks or IBA took any initiative to pubclicise the extension date.  ELTF issued press note and publicised throughout India for the benefit of SC/ST students.  The insensitivity of the Banks and the Indian Banks Association in implementing the Education Loan Scheme is the main reason for all the problems faced by the students.

-  By K. Srinivasan, Convenor, Education Loan Task Force

Friday, December 19, 2014

Independent expert committee to investigate education loan and interest subsidy scheme demanded in Lok Sabha

At the request of ELTF, Shri S R Vijayakumar, MP of Chennai Central took up the Education loan interest subsidy issue during 'Zero hour' in the Lok Sabha on 18th Dec 2014.  He demanded an independent expert committee to be set up to investigate into the administration of education loan and interest subsidy scheme.

The text of his speech as published in the Lok Sabha site:

http://164.100.47.132/newdebate/16/3/18122014/7To8pm.pdf

SHRI S.R. VIJAYA KUMAR (CHENNAI CENTRAL): Hon. Deputy-Speaker, Sir, I would like to bring to the notice of the august House an important matter. An independent expert Committee should be formed to investigate the administration
of educational loan interest subsidy. In response to my submission in the Lok Sabha on 30th July, 2014 under Rule 377, the hon. Finance Minister has written that the banks have been advised not to insist on payment of interest when the students are eligible for interest subsidy on educational loan. He has also mentioned that the banks have been asked to follow the guidelines. But in reality
we get a lot of complaints that the banks are forcing students to pay interest when they are eligible for interest subsidy. The poor students are forced to borrow money from all sources to repay the bank interest. The banks are creating only a small portion as eligible interest subsidy to the students. This defeats the very
purpose of the scheme to provide educational loan to poor students with comparable repayment. We get reports that the SBI classifies the educational loans as NPA even within four to five months after the moratorium and refer to Lok Adalat. This is causing mental agony to young students. There seems to be a lot of mess in administering interest subsidy on educational loans. I would like to
request the hon. Finance Minister to investigate the matter by forming a committee of independent expert 

Monday, December 15, 2014

Finance Minister's response on 'Interest subsidy' - ELTF demands constitution of an independent investigation committee


As requested by ELTF, Chennai Central MP Shri S R Vijayakumar took up the issue of poor management of 'interest subsidy scheme' by the banks in the Lok Sabha under Rule No 377 on 30th July 2014.  link.  In response to the submission in Lok Sabha, Hon'ble Finance Minister Shri Arun Jaitley has sent his personal response to Shri S R Vijayakumar MP on 1st Dec 2014.  In this letter, Finance Minister mentions the following important points.

1.  All Banks have been asked to display in their branch premises prominently, a toll free number for giving complaints.

2.  All Banks have been advised to follow the instructions given by the Government/RBI and IBA for considering and granting of education loans.

3.  All banks have been advised not to insist the student borrowers to pay interest during the moratorium period, if they are eligible for interest subsidy.

4.  Interest subsidy scheme has been duly publicised through print and TV media widely.

5.  If there is a delay in reimbursement of subsidy, the students are given retrospectively by the banks. 

Probably, ELTF feels that Hon'ble Finance Minister might have just reproduced the comment given by IBA or any other authorities, as if the entire system is working well.  In reality, the banks are not displaying any toll free number prominently to enable the public to communicate the grievances.  Banks do not follow the guidelines issued by IBA in respect of Education Loans.  Many of the Private Banks have scant respect for IBA guidelines.

Though, the banks have been instructed not to insist on the payment of interest, if they are eligible for interest subsidy, during moratorium period. In reality, all the banks force the banks to pay interest during the moratorium period. Instead of calculating at simple rate, all the banks calculate interest on compounded basis. Though the students are eligible for 100% interest subsidy, they are given only a small portion of the subsidy. 

Though the banks are required to communicate the interest subsidy scheme individually to all the student borrowers, they do not inform the students.  No publicity campaign has been done by IBA or by any banks.  Probably IBA has misled the Government with wrong information.

From the feedback received by ELTF, we are of the opinion that the Finance Minister has not been given the right picture of the management of the scheme.  Though the students are promised 100% subsidy during the moratorium period, they are given only a small portion.  

Though one year holiday period is given after the study, many students do not get proper employment.  Banks like State Bank of India after  3 or 4 months of moratorium period, treat the loans as NPA and handover to Lok Adalat and force students to sign documents to pay the entire loan within six months.  While IBA guidelines permit flexible repayment schedule upto 10 to 15 years, the many banks, including State Bank of India, pressurise the students to pay money beyond their capacity, thereby defeating the very purpose of the scheme. This affects their credit rating through CIBIL.

Recently, ELTF came across a case where a Branch in Chennai Zone of Corporation Bank did not submit the claim for interest subsidy, within the due date, since the officer was on leave.  The insensitivity of the Branch Manager and the Zonal Manager has denied interest subsidy to an eligible borrower. This has also been brought to the knowledge of Finance Minister. 

ELTF is once again taking up the matter with Hon'ble Finance Minister through Shri S R Vijayakumar.

ELTF appeals to the Government to constitute a committee of independent experts to look into the management of education loan and interest subsidy scheme. 

Friday, November 14, 2014

One more opportunity for SC/ST students to claim interest subsidy before 31st Dec 2014



Indian Banks Association has now issued a circular advising all the banks to submit any left out interest subsidy claims relating to eligible SC/ST students who have availed education loan from the banks.  Since the funds allotted to SC/ST students are not fully utilised, they are now advising all the banks to submit the claims from 1.4.2009 onwards till the financial year 2013-14.  This is not applicable for 'General category' students. 

The claims have to be submitted by the respective banks before 31st December 2014 to nodal bank Canara Bank.  If there are any eligible SC/ST students who have not claimed interest subsidy in the previous years may now avail this opportunity.  ELTF requests such eligible students to meet their Branch Manager with a copy of this IBA guideline and complete the formalities.

If the Branch Managers refuse to cooperate or show ignorance of this notification, the eligible students may meet the concerned Regional Manager and submit a written complaint to him.  They can also submit a written complaint to the Chairman of the Bank.  The last date for submission of claim by the banks is 31st December 2014.  


Monday, August 4, 2014

Chennai-Central MP takes the interest subsidy issue in Lok Sabha



On the request of ELTF, Mr S R Vijayakumar MP (Chennai-Central) took up the issue in Lok Sabha on 30th July 2014 under Rules No 377.  The text of his speech as published by Lok Sabha Secretariat is attached.

As you know, ELTF has been taking up this issue for a long time, even during the 15th Lok Sabha.  The serious concern is that all the eligible students do not get the full interest subsidy from the Government of India.  Though the Government claims to give 100% interest subsidy during the moratorium period, not even a single student gets the subsidy as per the rules.  

This happens due to the insensitivity of the banks and the Government.  Ultimately, the students are asked to pay the interest, though, it is to be got reimbursed from the Government.  Instead of disbursing interest subsidy, ELTF has been demandiang 'interest free education loan' till the end of moratorium period.  Then the responsibility will lie on the banks to collect the interest from the banks.

ELTF thanks Shri S R Vijayakumar, Hon'ble Member of Parliament for taking up the issue in Lok Sabha.

Saturday, July 19, 2014

Interest subsidy scheme for minority students (Padho Pardesh Scheme) for overseas studies


Government of India, Ministry of Minority Affairs has now introduced a new scheme for providing 'interest subsidy' for minority students for overseas studies.  This scheme comes into force from 2013-14.  The loan for overseas studies for specific courses should have been sanctioned by the bank under IBA model scheme.  The annual income of the parents should be less than 6 lakhs.  

If the student is eligible, the Government of India provides full interest subsidy during the moratorium period. (course period plus one year or six months after getting employment, whichever is earlier).

Canara Bank is the nodal bank for managing the interest subsidy.  The banks can file their interest subsidy claims from 1st July 2014.  

This interest subsidy is applicable only for minority students.  Eligible students may contact the concerned Branch Manager for completing the formalities.

Full details of the scheme may be downloaded from the link.



Thursday, July 10, 2014

Madras High Court rules: Banks can't insist on minimum 60% marks to extend educational loans


Please read the media reports dated 9th July 2014


HC orders grant of loan to management quota student

Madras High Court today upheld order of a single judge directing Indian Overseas Bank to grant educational loan to an engineering student, whose plea for the assistance was rejected on the ground he secured a seat under management quota with less than 60 per cent marks. 

Dismissing an appeal by IOB's Tiruppur Branch challenging the single judge's June 20, 2013 order, a division bench comprising Justice N Paul Vasanthakumar and Justice M Sathyanarayanan directed the bank to grant the loan to the son of one A Ravi within two weeks from the receipt of the order. 

The bench said the issue of eligibility has already been settled by the announcement of the Union Finance Minister that students admitted in the management quota were also entitled to get the education loan and all the banks were directed to adopt the said Policy. 

On the basis of the announcement, a review meeting of all the Chief Executives of the PSU banks was held on September 27, 2012 which resolved that the Managing Committee considered the recommendations made by the Indian Banks Association Committee on Educational Loan Scheme and after detailed discussions decided to finance the meritorious students, who pursue courses under Management quota, the court said. 

"In the guidelines framed in the Review Meeting, nowhere it is stated that educational loan can be sanctioned only for those who have secured 60 per cent and more marks," it said.


Banks can't insist on minimum 60% marks to extend educational loans: Madras high court

CHENNAI: Banks cannot fix 60% of marks as minimum required percentage for extending education loan to students, Madras high court has ruled.

A division bench of Justice N Paul Vasanthakumar and Justice M Sathyanarayanan, coming to the aid of an engineering student who got admission under management quota, said on Wednesday that it was incorrect on the part of the bank to deny loan to him on the ground that he has scored only 59% of marks and not the minimum required percentage of 60%.

After being denied an education loan by the Indian Overseas Bank, A Ravi moved the high court for a direction. In June last year, a single judge directed the bank to extend loan to the boy, saying banks cannot deny loans on the ground of minimum marks percentage, that too after he is given admission under management quota.

The bank filed the present appeal saying candidates who have secured 60% marks and above alone are eligible to get education loan as they alone can be treated as meritorious candidates.

Rejecting the submissions, the bench said, "The Government of India launched the scheme of providing educational loans to the economically disadvantaged people, through nationalised banks. Sanction of educational loan is not free, but it is repayable with interest at a later point of time, of course, at reduced rate of interest. The whole idea behind the scheme is to finance the economically disadvantaged people. It is a social commitment for the upliftment of weaker, vulnerable and other sections of the society. It is a social welfare measure. In a way, it is some sort of social banking."

The judges said public sector banks and other financial institutions should bear the government's policy in mind while sanctioning educational loans covering the genuine, reasonable and justified educational expenses and relieve the students and their parents from pressing financial crisis.

In this regard, the judges also pointed out that a review meeting of top bankers decided on September 27, 2013, that they would extend loans to meritorious students who get admission under management quota. It is also stated in the decision that loan applications have to be disposed of within a period of 15 days to one month.

Saturday, May 31, 2014

Android App to get complete details on Education Loan - Download link

free download of android app on education loan guidelines

Education Loan Task Force has now developed an Android app to provide complete details on Education Loan procedures, Guidelines, Interest Subsidy, Complaint procedures, etc.

Interested may download free from the following link and install in their Android mobile and other android devices.

The App was developed by Natarajan Raman (Co-Convenor of Education Loan Task Force and Co-Founder of Action 2020 and India Vision Group).

Please download from the link


Please also share the link with other interested students.  Please send your review and suggestions for improvement of this app to our mail id info@eltf.in


Thursday, April 10, 2014

Guidelines on Interest subsidy for education loans granted prior to 1st April 2009 and outstanding as on 31st Dec 2013

Canara Bank, Nodal bank for interest subsidy has now released the guidelines officially to claim the interest subsidy on the education loans granted prior to 1st April 2009 and outstanding as on 31st Dec 2013.

The guidelines can be downloaded from the link.
or

Updated on 15th April 2014:  Election Commission has now announced that no bank should make publicity of interest subsidy scheme due to the General Elections and not to disburse the interest subsidy till the completion of elections.  However the eligible students are advised by ELTF to get in touch with the concerned Bank Manager for further instructions.



Wednesday, April 9, 2014

Minutes of the meeting of the Working Group on Educational Loan Scheme held on 31st January, 2014 at Canara Bank, Bengaluru


Minutes of the meeting of the Working Group on Education Loan Scheme held on 31st January 2014 at Canara Bank, Bangaloru. In this minutes the working group has discussed the problems relating to the disbursement of interest subsidy. 

                        Indian Banks’ Association

Minutes of  the meeting  of the Working Group  on Educational Loan Scheme
held on 31st January, 2014 at Canara Bank, Bengaluru

The Nodal Bank under the Scheme viz. Canara Bank had convened a meeting of the Working Group on Educational Loan Scheme on Friday, 31st January, 2014 at 10.00 a.m. at Canara Bank, Head Office, Bengaluru to discuss the issues related to submission of claims by Member Banks under the scheme.  The meeting was chaired by Mr. S S Bhat, General Manager, Canara Bank and Mr. Sahdev Singh, Under Secretary, MoHRD, Govt. of India   along with  the special invitee,  the following were present:

1.      Mr. Sahdev Singh, Under Secretary, Ministry of HRD, Government of India
2.      Mr. S.S. Bhat, General Manager, PC & FI Wing, Canara Bank
3.      Ms. Prabhuta Vyas, Sr. Vice President, Indian Banks’ Association
4.      Mr. C S Vasantha Kumar, General Manager, Indian Overseas Bank
5.      Mr. M Balakrishnan, General Manager, Indian Bank
6.      Mr. K S Prabhakara Rao, Advisor, Financial Inclusion, Canara Bank
7.      Mr. S Ramesh, General Manager, RRB & LB wing, Canara Bank
8.      Mr. K R Basava, Dy. General Manager, State Bank of India
9.      Mr. Rakesh Luthra, Dy. General Manager, Punjab National Bank
10.  Mr. G Anantharam, Dy. General Manager, Syndicate Bank
11.  Mr. Narender Singh, Dy. General Manager, Central Bank of India
12.  Mr. M V Narasimha Rao, Dy. Zonal Manager, UCO Bank
13.  Mr. I C Amruth Kumar, Dy. General Manager, Union Bank of India
14.  Mr. A K Das, Dy. General Manager, PC&FI Wing, Canara Bank
15.  Dr. M Jayadev, Associate Professor, IIM, Bangalore
16.  Dr. D Geetha Rani, Associate Professor, NUEPA, Delhi
17.  Mr. K R Badrinath, Asst. General Manager, Canara Bank
18.  Mr. Purushotham, Manager, Canara Bank
19.  Mr. Sankar San, Manager, Canara Bank  
20.  Ms. Juihathi, IIM, Bangalore

Mr. S.S. Bhat, General Manager welcomed all the participants to the Working Group meeting on Central Sector Interest Subsidy Scheme on Education Loans. He highlighted the following points in his opening remark:-
·         There is lack of awareness among some Branch Managers about CSIS Scheme which has led to lot of complaints from the student community. 
·         Interest subsidy amount is credited to the accounts of SC Candidates in full and only a partial amount is credited to the accounts of ST and other General Candidates.  This partial credit of interest subsidy has led to complaints to Ministry of HRD, Indian Banks’ Association, the concerned Bank, Nodal Bank and  Education Loan Task Force.  Ministry of HRD to expedite settlement of claims.
·         FAQs can be developed based on the analysis of the complaints and other issues that are raised by the students, and the same can be placed in the CSIS Web Portal as well as in the web site of the individual Banks.
·         Lot of queries is coming under RTI.  The applicants send a copy of the same to the Ministry and the Nodal Bank and IBA.  Queries to be sent directly to the concerned Bank from the Ministry instead of sending it to Nodal Bank so that the concerned Bank can send replies to the queries at the earliest possible time to the applicants.
·         Issue of refund interest subsidy claims of various Member Banks:    Ministry is very serious about this aspect.   He requested all the Member Banks not to give scope for refunds in future and ensure proper checks at the branch level.  Refund of claims is to be reduced to the minimum extent.
·         With regard to share of SC/ST and Minority Communities under CSIS Scheme on Education Loans,  utilization under these categories is less and not upto the budgeted extent. Banks should pro-actively propagate the Scheme among SC/ST and Minority Communities.  There is an apprehension in the minds of Ministry of HRD, Government of India that the EL applications of SC/ST and Minority Communities are not considered sympathetically at branch level.
·         With regard to the concern expressed by the Government on regional disparities,.  he informed that 85% of the claims on Education Loan Interest Subsidy are from Banks located in the Southern Regions.  In respect of Northern, Eastern and Western Regions, the amount of interest subsidy is very less.  On an analysis, it is observed that the maximum claims of interest subsidy are in the States of Tamil Nadu and Kerala followed by Karnataka and Andhra Pradesh.  Locality/ popularity of the Educational Institutions is one of the reasons for the same.  Of late,  there has been some improvement in the growth of Education Loans in the Northern and Eastern Regions also.  Regional disparity has to be reduced to a great extent.

Mr. Sahdev Singh, Under Secretary, Ministry of HRD, in his opening remarks, stated that for funds to be released by Government of India, the approval of the Parliament is required.  With reference to the request of Nodal Bank for release of funds to the extent of ₹ 2,500 crores  for the claim pertaining to last financial year and current financial year, Mr. Sahdev Singh informed that Ministry of HRD will take up this matter with appropriate authority for sanction of the estimated budget submitted by Nodal Bank.  Ms. Prabhuta Vyas, Senior Vice President, IBA suggested to take up the issue with Ministry of Finance as Banks are facing lot of problems due to release of funds in tranches. 
Mr. S.S. Bhat, General Manager stated that the estimate given by Nodal Bank under CSIS is in tune with the claims.  He suggested that while finalizing the budget for 2013-14 and 2014-15, the matter may be discussed with the Nodal Bank and IBA for finalization of adequate funds.  Member Banks would also inform the required estimated claim amount under the Scheme to the Nodal Bank to get a fair idea about the estimated amount.   He stated that the figure relating to amount of claim provided by Nodal Bank is near to the actual claims submitted by Member Banks.
Official from State Bank of India informed that the request for Education Loans are on the rise in the State of Bihar and Jharkhand in the recent past and hence, the demand for interest subsidy will be more in the coming days.  He requested Ministry of HRD to see that the funds are provided / arranged in full according to the estimate provided by the Nodal Bank.  Mr. Sahdev Singh assured that MoHRD will try to convince the Ministry of Finance in this regard.
Ms. Prabhuta Vyas, Senior Vice President, IBA was of the view that release of interest subsidy in different percentages to different categories of students by Ministry of HRD is not proper and requested them to release the funds in such a way that interest subsidy claims are settled in full for all categories of students.   By doing so, complaints can be reduced to a great extent from the students under CSIS.
With this, the following Agenda Items were taken up for discussion.
Agenda Item 1: Opening of the web portal for submission
for the period from 2009 to 2013

Mr. S. Ramesh, General Manager stated that many Member Banks have requested for submission of pending claims pertaining to earlier  FYs 2009-10, 2010-11, 2011-12 and 2012-13 as many eligible students have complied with the condition of submission of Income Certificate obtained from the designated Income Certificate Issuing Authority.    Nodal Bank has already made a representation to Ministry of HRD during April 2012, August 2013 and December 2013 to examine the above issue as the problem is faced by all Member Banks.

However, Mr.  Sahdev Singh has intimated that earlier in a meeting held on 02.04.2012, it was decided that 
“All pending claims pertaining to the period 1st April, 2009 to 31st March, 2010 and 1st April, 2010 to March 2011 may be submitted by banks to the Nodal Bank during the period 1st April, 2012 to 30th June, 2012.
All pending claims pertaining to the period 1st April, 2011 to 31st March, 2012 may be submitted by the banks to the Nodal Bank during the period 1st April, 2012 to 30th June, 2012.  Supplementary claims, if any, may be submitted by the banks during the period 1st October, 2012 to 30th November, 2012.”
Again in a meeting held on 10th October, 2012 it was decided that:
“All pending claims pertaining to the period 1st April, 2009 to 31st March, 2010 and 1st April, 2010 to 31st March, 2011 may be submitted by banks to the Nodal Bank during the period 1st November, 2012 to 30th November, 2012.
All pending claims pertaining to the period 1st April, 2011 to 31st March, 2012 may be submitted by the banks to the Nodal Bank during the period 1st December, 2012 to 31st December, 2012.”
Accordingly, due to budget constraints, again it is not possible to allow to submit the pending claims for FY 2009-10, 2010-11, 2011-12 and 2012-13 during FY 2013-14.
An official from Syndicate Bank suggested to open the Window exclusively for the above purpose during November-December of this year.

Ms. Prabhuta Vyas of IBA suggested that as the CSIS was launched effective 1st April, 2009 and as the RRBs and Co-operative Banks were since made aware of the scheme in 2012 only, hence it is logical for MoHRD to consider claims received from RRBs and Co-operative Banks with effect from 1st April, 2009.  Also there are chances of left out claims by the student borrowers because of non-submission of income proof certificate / non issuance of proof by the State officials to students.  The MoHRD is requested  to permit as a One Time measure for banks to submit all their pending claims from all  Scheduled Commercial Banks  with a pre-derived cut-off date to be decided by the Ministry of HRD.

This would definitely go a long way in generating good will among the students  community and will encourage the cause of education of students belonging to economically weaker section and will serve the Nation’s cause.
(Action: MoHRD)
Mr. A.K. Das, Deputy General Manager, Canara Bank suggested to give advertisement and wide publicity providing an opportunity to the students to prefer their claims pertaining to the earlier years and giving a date as the deadline beyond which no claim will be entertained.

Ms. Prabhuta Vyas, Senior Vice President, IBA suggested to Ministry of HRD, Government of India to give advertisement  through DAVP mentioning the salient features of the Scheme on behalf of all the Member Banks as the cost of advertisement incurred by each individual Member Bank would be enormous if they take up the above task on their own.
(Action: MoHRD)
Agenda Item  II: Release of funds in tranches by Ministry of HRD:

Ms. Prabhuta Vyas stated that students/parents are coming with queries/complaints that while the Scheme itself is not discriminating the eligibility criteria, why at the time of release of interest subsidy, there is discrimination.   Moreover,  Bank branches are facing operational difficulties in this regard and hence this issue needs to be resolved. She opined that Bank’s problems would be solved to a great extent if the funds are released in equal proportions to all categories of students.
(Action: MoHRD)

Official from State Bank of India also agreed with views of Ms. Prabhuta Vyas and informed that their branches are also facing similar problems with regard to the above aspect.

Agenda Item III:  Guidelines for refund of claims under CSIS Scheme:

Mr. S. Ramesh, General Manager opined that refund of claims under CSIS Scheme is one issue which is prevalent in almost all Banks.    He suggested Member Banks to put in place a proper mechanism to submit the claims properly.  He felt that this sort of problems are creeping in due to manual intervention.  He stated that Nodal Bank is receiving lot of objections from Ministry of HRD in this regard.

Mr. S. Ramesh requested Member Banks to advise the branch officials to ensure that this type of instances is avoided to a maximum extent.
(Action:All CSIS participating Banks)
Official from Syndicate Bank informed that letters are being issued to the Branch Managers that they would be accountable for such type of instances and any penalty imposed by the Ministry of HRD would be recovered from them only. 
Ms. Prabhuta Vyas, Senior Vice President, IBA requested the Member Banks to make sure that Branch Managers are aware of the Scheme.   Many students are not aware that they have to submit Income Certificates for availing interest subsidy under the Scheme.   Many students are of the view that EL under CSIS Scheme is an interest free loan.  Students should be made aware that they have to pay interest first and then claim the interest subsidy from the branch by submitting Income Certificate.

Mr. K.S. Prabhakara Rao, Advisor, Canara Bank requested Member Banks to obtain Income Certificates from the students at the time of sanction of Education Loans itself instead of calling for Income Certificates at the time of submission of interest subsidy claims as it will save lot of time to the Bankers.
Ms. Prabhuta Vyas suggested to put FAQs – Dos and Don’ts for the student borrowers and for the Bank branches in the website of the Banks which will be helpful for the Branch Managers as well as the student community.
Mr. Sahdev Singh opined that as per the analysis made by the Nodal Bank (Canara Bank), the major reasons for refunds are on account of-
·         non-submission of Income Certificates by the student borrowers,
·         Account not eligible for subsidy,
·          Excess claimed, Wrongly included/erroneous claimed,
·         study abroad,
·         Non-compliance of scheme guidelines,
·         Disbursement prior to eligible period,
·          Income less than ₹ 4.5 lacs p.a.,
·         Subsidy claimed after moratorium period, Excess interest charged and claimed,
·          Course completed,
·         Second loan,
·         Repayment already commenced,
·          Subsidy claimed for 2008-09 which is not eligible,
·          Loan under Management Quota, ineligible courses,
·          double claim submitted and calculation error, etc.

He requested that all bankers should ensure that refunds are  not made on account of the above mentioned reasons.

Mr. S. Ramesh, General Manager suggested all the Member Banks to send the details of refund, if any, as per the format which will be made available in the web portal, shortly by Nodal Bank.
(Action: Canara Bank)
Agenda Item IV: Display of list of eligible courses that are covered under CSIS Scheme:
Mr. S. Ramesh, General Manager stated that IBA has given the list of eligible courses and the list given by them is not the final one as the same is dynamic.  Banks are including some other Courses under CSIS Scheme.  It is only an indicative list.   He requested that Ministry of HRD may come out with a list of eligible courses under CSIS Scheme.

Ms. Prabhuta Vyas opined that there will not any problem if Ministry of HRD continuously updates the list of eligible courses as new courses are being introduced every year and innovation has become the order of the day.

In this regard,  Mr.  Sahdev Singh has intimated that Ministry is regularly writing to UGC, AICTE, MCI, DCI, PCI and the respective Central Government Ministries such as, Agriculture, H&FW, Tourism, Civil Aviation, Social Justice, Labour, Law, Commerce, Coal, Petroleum, Chemical, S&T and Shipping, etc. for displaying the names of accredited Universities/Institutions and recognized professional courses on website.

Agenda Item V: Guidelines for inclusion of Co-operative banks under the purview of CSIS Scheme (Banks which are not featuring in the Schedule II list of RBI):
Mr. S. Ramesh, General Manager informed that there is a huge demand from the Co-operative Banks which are financing Education Loans that they should also be included for claiming the interest subsidy under CSIS Scheme.  He enquired with the Ministry of HRD and IBA as to whether the scope can be enlarged for covering the interest subsidy.

Ms. Prabhuta Vyas, Senior Vice President, IBA reiterated its earlier Managing Committee decision and informed  that IBA will be in a position to advise only its members for uploading all information relating to CSI Scheme.  As regards, Co-operative Banks which are not member of the IBA, the MoHRD  may workout a separate dispensation for submission / payment of claims under the scheme as well as uploading of information relating to students entitlement benefits in the web portal.   She further informed that Co-operative Banks which are in the Schedule II List of RBI and are implementing IBA’s Model Education Loan Scheme only are covered and eligible for claiming interest subsidy under CSIS Scheme. She further clarified that in the year, 2011-12, the Ministry of HRD had advised that the Interest Subsidy Scheme would be applicable also to all Co-operative Banks which are listed in the Schedule II of Reserve Bank of India Act, 1934 and as amended from time to time and for the purpose of extending the Interest Subsidy Scheme to Co-operative Banks. Official from Syndicate Bank made a request to Ministry of HRD to seek the views of NABARD in this regard. 

However, Mr. Sahdev Singh also requested to all for making / give suggestions that - which entities/Cooperative Societies/Banks (i.e. Scheduled/Non-scheduled / State Co-operative / Distt. Co-operatives, etc.) can be covered under the scope of CSIS. Accordingly, MoHRD will write to NABARD for further future course of action, in this respect. 

Agenda Item VI: Income Criteria for Economically Weaker Sections (EWS):

With regard to enhancing the income limit from ₹.4.5 lakhs to ₹.6.00 lakhs, Mr. Sahdev Singh stated that there is already a huge burden on the part of the Ministry and the same can be thought of , after some years.

Agenda Item VII: Monitoring of beneficiaries (SC/ST/Minority/Disabled etc.) of the Scheme:

With regard to Monitoring of beneficiaries (especially, women, SCs/STs/Minority (Muslims in particular)/Disabled, etc.)  of the Scheme, Ms. Vyas opined that keeping in mind the national objective, banks should strive to increase the no. of beneficiaries and that the  Bank branches can be sensitized in this regard.   Nodal Managers  can be designated by the Member Banks for the purpose of monitoring and ensuring  maximum coverage of the students belonging to the above category besides crediting the interest subsidy amount to these students’ accounts in time.

Agenda Item VIII: RTI Applications/FAQs/Complaints/Grievance Redressal Mechanism/Problem of Customer Management (Agenda included as per the directions from Ministry of HRD):

Mr. S. Ramesh, General Manager, Nodal Bank stated that lot of RTI queries are being received not only by branches of our Bank but also branches of other Banks.    He stated that Ministry of HRD, Government of India is forwarding RTI applications pertaining to other Banks also to the Nodal Bank which is not having the required information for disposal of such applications.   He also requested the Member Banks to share the good practices adopted by their Banks for administering the Scheme and the initiatives taken by them with regard to recovery of EL/follow up under the Scheme.

Ms. Vyas suggested that the complaints / queries may be resolved through robust grievance redressal mechanism within the organisation.  The arrangements need to be widely publicised with details of contact persons / escalation matrix etc. All banks are required to sensitise their branches to have these facilities made available / make awareness among students approaching the banks for sanction of the education loan. 

All banks may provide a toll free line for receipt of complaints and the Number may be prominently displayed in the branch premises.  Also, she highlighted that IBA has been constantly receiving an average of 10-15 complaints on non-availability of Interest Subsidy from student community in this regard.  Also, MoF, MoHRD, MPs and MLAs also forward various representations received by them and requesting us to take action in the matter.  Apart from this, we are receiving a large number of telephone calls / emails on education loan queries / guidance and complaints. 

However, to simplify the procedure, she requested Ministry of HRD to send the RTI applications / Complaints  pertaining to other Banks directly for redressal of the same at the earliest to the concerned banks and not to IBA or Nodal Bank.
(Action: MoHRD)
Later, the special invitees from NUEPA,  New Delhi and IIM, Bangalore were requested to inform the outcome of their study of the CSIS Scheme.
Ms. Geetha Rani, Associate Professor, NUEPA, speaking on the occasion, stated that the sanctity of submission of Income Certificate by the students for availing interest subsidy under CSIS Scheme needs to be looked into.  Further, she stated that though the number of students availing interest subsidy in Tamil Nadu is high, but the per student interest subsidy is less.
She requested the Member Banks to provide them the details of Education Loan availed by the students under different categories and the interest subsidy sanctioned by them so that NUEPA can make an effective study on the same and come out with suggestions.

Mr. Jayadev, Asst. Professor, IIM, Bangalore, speaking on the occasion, stated that they have already collected data from Canara Bank about CSIS Scheme and are  analysing the various aspects of the Scheme.  He stated that Government is trying to increase the Gross Enrolment Ratio in the Educational Institutions, due to which Educational Loans have been increasing.
He opined that Branch Managers in the Banks must be aware of the eligible courses as well as the recognized Educational Institutions so that it becomes easy for them at the time of claiming interest subsidy.   He stated that there should be more clarity with regard to eligible courses and recognized Educational Institutions from Ministry of HRD.

When it comes to identification of the potential candidates, Educational Institutions can also play a vital role.  Local Banks can have a meeting with the Educational Institutions at the beginning of the calendar year and an Office can be opened in the Educational Institutions with the assistance of one or two persons.    He also made a suggestion not to sanction Educational Loans to those SC/ST students who have already been sanctioned Scholarship.  Official from IIM, Bangalore further opined that good co-ordination between Banks and Educational Institutions will go a long way in recovery of the Educational Loan from the students.

The meeting ended with the vote of thanks to the chair.


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l.eduiss.Finalminutes 31012014

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